A. Stuart Rubin, et al., v. Preferred Bank

Case Number

21CV03982

Case Type

Hearing Date / Time

Wed, 11/15/2023 - 10:00

Nature of Proceedings

1) Defendant Preferred Bank’s Motion for Summary Judgment; 2) Defendant Preferred Bank’s Motion for Terminating Sanctions Dismissing Plaintiffs’ Complaint and Striking Plaintiffs’ Answer to Cross-Complaint

Tentative Ruling

For Plaintiff and Cross-Defendant A. Stuart Rubin: Self-Represented

                                   

For Plaintiff and Cross-Defendant Annette Rubin: Self-Represented

                                   

For Plaintiff and Cross-Defendant 1604 Sunset Plaza LLC: Unrepresented

                                   

For Plaintiff and Cross-Defendant Elliot Lander: Self-Represented

For Defendant and Cross-Complainant Preferred Bank: Michael E. Bubman, Mirman, Bubman & Nahmias, LLP

                       

RULING

For the reasons set forth below:

1. Defendant Preferred Bank’s motion for summary judgment is granted.
2. Defendant Preferred Bank’s motion for terminating sanctions is granted.
3. The trial date of 11/29/23 is ordered off calendar.
4. Preferred Bank shall submit an Order consistent with this ruling.

Background

This action was commenced on October 6, 2021, by the filing of the complaint by Plaintiffs against Defendant Preferred Bank (Preferred).

As alleged in Plaintiffs’ complaint:

Plaintiff Stuart Rubin (Rubin) is a real estate investor and developer. (Complaint, ¶ 24.) For approximately 30 years, Rubin and his various entities have had long term banking relationships with several banks, including Defendant Preferred. (Complaint, ¶¶ 24-26.) Rubin and his wife, Plaintiff Annette Rubin (A. Rubin), (collectively, the Rubins) formed a close and confidential relationship with Preferred and its President and Chief Executive Officer, Wellington Chen. (Complaint, ¶ 27.) Business was not done by formal applications, but were discussed in a meeting or on the phone or by text and Preferred would send documents for the loan as discussed. (Ibid.) Preferred’s standard practice was to provide Rubin and his related entities with credit lines on an unsecured, interest-only basis, and to regularly renew those lines. (Complaint, ¶ 28.)

On August 21, 2017, Preferred insisted that Rubin and his entities convert the unsecured credit lines to a jumbo loan of $12,750,000 (the Loan or Loan No. 209465) to be supported by collateral. (Complaint, ¶ 29 & exhibits 1, 2.) The collateral for the Loan included (1) a second deed of trust on the residence at 715 N. Alpine Drive, Beverly Hills (the Beverly Hills Property), (2) a third deed of trust on the Rubins’ home at 4347 Marina Drive, Santa Barbara (the Santa Barbara Property), and (3) a second trust deed of trust on property located at 1604 Sunset Plaza Drive, Los Angeles (the Sunset Property) owned by Plaintiff 1604 Sunset Plaza, LLC (Sunset). (Complaint, ¶¶ 17, 30 & exhibits 3-5.) Rubin is the manager of Sunset. (Complaint, ¶ 17.)

In April 2019, Preferred increased the principal of the Loan by approximately $4,125,870 to $16,875,868.57, paying off four other loans. (Complaint, ¶ 31 & exhibit 6.) The Loan was guaranteed by Sunset, the Stuart and Annette Rubin Family Trust dated 11/4/2003 (Family Trust), and the Stuart Rubin Children’s Trust dated 12/21/2001 (Children’s Trust). (Complaint, ¶¶ 16, 18, 32 & exhibits 7-9.)

In December 2009, Rubin had lunch with Chen and discussed restructuring the Loan’s debt service. (Complaint, ¶ 33.) Chen reiterated that Preferred’s relationship with the Rubins was important to Preferred. (Ibid.) They also agreed that Preferred only needed a principal paydown from the proceeds of the sale of the Beverly Hills Property, that following the sale of the Beverly Hills Property Preferred would then restructure the Loan, and that interest owed on the Loan could be paid by means of a separate loan. (Complaint, ¶ 34.)

The Loan’s stated maturity date was March 5, 2020. (Complaint, ¶ 35.) Preferred agreed to defer the maturity date to March 31, 2020, if the Rubins paid $37,000. (Ibid.) The Rubins made that payment, effectively deferring the maturity date on the Loan. (Ibid.)

By mid-March 2020, the COVID-19 pandemic occurred, and most banks were readily able to accommodate their affected borrowers. (Complaint, ¶ 36.) Preferred reiterated and explicitly agreed in mid-April 2020 that the Rubins could sell the Beverly Hills Property, apply $8 million or more of the sales proceeds to pay down the outstanding principal owed on the Loan, and that Preferred would restructure the remaining outstanding loan amount. (Complaint, ¶ 37.) (Note: The complaint identifies exhibit 10 as an email exchange. Instead, exhibit 10 attached to the complaint is a document entitled, “Business Loan Agreement.”) The April 2020 email exchange is identified by Plaintiffs as a “forbearance agreement.” (Ibid.)

The Rubins listed the Beverly Hills Property for sale and kept Preferred informed of offers and the ongoing process. (Complaint, ¶ 38.) Preferred did not keep the Rubins informed of their plans to record a notice of default and, as such, the Rubins rejected certain offers made on the Beverly Hills Property. (Complaint, ¶ 39.) Had the Rubins accepted the offers, Preferred would have received its $8 million in principal paydown, the Loan would have been restructured, and the foreclosure halted before it began. (Ibid.)

Preferred recorded notices of default (NOD) on each property on June 3, 2020, but did not tell the Rubins at that time. (Complaint, ¶ 40.) The Rubins learned of the NODs two weeks later when they arrived by mail. (Ibid.)

As a result of Preferred’s actions, the Rubins filed suit against Preferred on October 2, 2020, as case No. 20CV03206 (the Prior Action). (Complaint, ¶ 42.) The Rubins successfully obtained a temporary restraining order in the Prior Action preventing Preferred from proceeding with the trustee sales of the three properties. (Complaint, ¶ 43.)

On January 6, 2021, the parties entered into a written Forbearance Agreement which served to act as a settlement agreement of the Prior Action. (Complaint, ¶ 44 & exhibit 11.) Among its express terms, the Forbearance Agreement required Plaintiffs to file a request for dismissal of the Prior Action. (Complaint, ¶ 45.) The Forbearance Agreement also required Plaintiffs to pay Preferred $8 million by June 6, 2021, in exchange for a Change of Terms Agreement with Preferred for the balance of the loan, modifying the repayment terms for the outstanding balance. (Ibid.) Plaintiffs complied with the terms of the Forbearance Agreement and timely made monthly payments owing under the Forbearance Agreement. (Complaint, ¶ 46.)

Between March 2021 and May 2021, Plaintiffs received several offers to purchase the Beverly Hills Property. (Complaint, ¶ 47.) Plaintiffs kept Preferred informed of the offers and of the opening of escrow within the timelines provided in the Forbearance Agreement. (Ibid.) Upon receiving notice from Plaintiffs of the opening of escrow, Preferred was obligated to extend the Forbearance Termination Date by at least 30 days until at least July 6, 2021. (Complaint, ¶ 48.)

Preferred in bad faith violated the Forbearance Agreement by recording a NOD on June 15, 2021, during the period by which the Plaintiffs contractually were entitled to continued forbearance. (Complaint, ¶ 49 & exhibit 12.) Preferred had predesigns to obstruct Plaintiffs from receiving the benefit of the bargain of the Forbearance Agreement and to take steps to ensure that it would not have to enter into the Change in Terms Agreement as agreed. (Complaint, ¶ 50.)

Plaintiffs accepted an all-cash offer to purchase the Beverly Hills Property and the buyer has waived contingencies. (Complaint, ¶ 52.) The escrow is open and was set to close on October 6, 2021. (Ibid.) Plaintiffs are actively taking steps to close the escrow, but the primary factor preventing the sale from closing is the NOD and notice of sale recorded by Preferred which Preferred refuses to rescind. (Ibid.)

Pursuant to the Forbearance Agreement, Preferred has made a demand to the escrow to be paid $8 million from the sales proceeds of the Beverly Hills Property. (Complaint, ¶ 53.) By doing so, Preferred is ratifying and seeking to enforce the Forbearance Agreement and is waiving any defects it contends existed in the Plaintiffs’ performance. (Ibid.)

At about the same time, Plaintiffs were negotiating with a third party to lease the Santa Barbara Property. (Complaint, ¶ 55.) The rent to be paid under the terms of the lease would have been more than sufficient to service the Loan. (Ibid.) However, Preferred, without notice to Plaintiffs, recorded a NOD on the Santa Barbara Property. (Complaint, ¶ 56 & exhibit 13.) The tenant, upon learning of the NOD, refused to execute any lease agreement, resulting in a loss of significant rental payments and Plaintiffs’ ability to promptly repay Preferred. (Complaint, ¶ 56.) Preferred also recorded a NOD on the Sunset Property. (Complaint, ¶ 56 & exhibit 14.)

Preferred has recorded notices of trustee’s sale (NOS) on each of the properties: a NOS for the Beverly Hills Property, noticing a sale for October 12, 2021; a NOTS for the Sunset Property, noticing a sale for October 12, 2021; a NOS for the Santa Barbara Property, noticing a sale for October 13, 2021. (Complaint, ¶¶ 58-59 & exhibits 15-17.)

On October 6, 2021, Plaintiffs filed their complaint in this action asserting 11 causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) estoppel; (4) slander of title; (5) interference with contractual relationships; (6) interference with prospective economic advantage; (7) unfair business practices; (8) unjust enrichment; (9) declaratory relief; (10) breach of fiduciary duty; and (11) constructive fraud.

Preferred filed a demurrer and motion to strike portions of the complaint and, on February 15, 2022, the Court sustained the demurrer as to the third cause of action for estoppel, the sixth cause of action for interference with prospective economic advantage, the eighth cause of action for unjust enrichment, the tenth cause of action for breach of fiduciary duty, and the eleventh cause of action for constructive fraud. Although they were given leave to amend, Plaintiffs did not do so. The remaining causes of action are the first, second, fourth, fifth, seventh, and ninth.

Preferred filed an answer to the complaint on April 5, 2022, asserting a general denial and 18 affirmative defenses. Concurrently with filing the answer, PB filed a cross-complaint against Plaintiffs, asserting causes of action for: (1) breach of contract; (2) breach of guarantees; (3) money lent; (4) trespass; and (5) loss of use of real property.

Preferred moves for summary judgment of each of the remaining causes of action “on the

grounds that this action has no merit, there are no triable issues of material fact and Preferred is

entitled to judgment as a matter of law.” (Notice of Motion, p. 2, ll. 2-10.) In the alternative, Preferred seeks summary adjudication of each of the remaining causes of action.

The Rubin Plaintiffs have filed six declarations from various individuals that they claim to be in support of their opposition. However, no opposition, separate statement, objections to Preferred’s evidence, or any other document has been filed by Plaintiffs besides the declarations.

Preferred also moves for an order dismissing with prejudice Plaintiffs’ complaint and striking the answer filed by cross-Defendants on the grounds that: (1) “Plaintiffs and Cross-Defendants have deliberately and repeatedly violated their statutory discovery obligations despite being afforded numerous opportunities by both Preferred and this Court to comply; (2) Plaintiffs and Cross-Defendants have violated and refused to obey numerous orders of this Court designed specifically to remedy the impact of their ongoing failure to comply with their statutory discovery obligations; (3) Preferred has been prejudiced in its ability to defend itself against the complaint or prosecute its cross-complaint as a direct result of Plaintiffs and Cross-Defendants’ deliberate, repeated and wrongful failures to comply with their statutory discovery obligations and this Court’s orders; and (4) Plaintiffs and Cross-Defendants’ continuing misconduct, which this Court described in its June 7, 2023 order as ‘egregious,’ ‘deliberate’ and occurring with ‘rhythmic regularity,’ makes clear that any sanction less than terminating sanctions will be ineffective.” (Notice of Motion, p. ii, l. 2 – p. iii, l. 8.)

The Rubins oppose the motion, in their individual capacity, on the grounds that “Defendant Preferred Bank has failed to demonstrate that Plaintiffs have willfully committed any violation of the discovery process.” (Opposition, p. 2, ll. 4-5.)

Analysis

1. Summary Judgment

A self-represented litigant is not entitled to “special treatment” (Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 524), but is held to the same standards as a party represented by counsel (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1247).

“[M]ere self-representation is not a ground for exceptionally lenient treatment. Except when a particular rule provides otherwise, the rules of civil procedure must apply equally to parties represented by counsel and those who forgo attorney representation. [Citation.] . . . A doctrine generally requiring or permitting exceptional treatment of parties who represent themselves would lead to a quagmire in the trial Courts, and would be unfair to the other parties to litigation.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984-985.)

Objections to Evidence

Preferred objects to multiple statements contained in the declarations submitted as opposition to the motion for summary judgment. “In granting or denying a motion for summary judgment or summary adjudication, the Court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.” (Code Civ. Proc., § 437c, subd. (q).)

“ ‘The same rules of evidence that apply at trial also apply to the declarations submitted in support of and in opposition to motions for summary judgment. Declarations must show the declarant’s personal knowledge and competency to testify, state facts and not just conclusions, and not include inadmissible hearsay or opinion.’ ” [Citation.] “ ‘The declarations in support of a motion for summary judgment should be strictly construed, while the opposing declarations should be liberally construed. [Citation.] This does not mean that Courts may relax the rules of evidence in determining the admissibility of an opposing declaration. Only admissible evidence is liberally construed in deciding whether there is a triable issue.’ ” [Citation.]” (Fernandez v. Alexander (2019) 31 Cal.App.5th 770, 779.)

Although most of Preferred’s objections would be sustained based on the fact that the submitted declarations are riddled with hearsay, conjecture, make improper legal conclusions, lack foundation and personal knowledge, and are otherwise irrelevant to the issues on summary judgment, the Court need not rule on the objections because the statements contained therein are not material to the disposition of the motion for summary judgment.

Standards on summary judgment

A Defendant’s motion for summary judgment asks the Court to determine that the entire action has no merit, and to terminate the action without the necessity of a trial. (Code Civ. Proc., § 437c, subd. (a).) The procedure enables the Court to look behind the pleadings to determine whether the party against whom the motion is directed has evidence to back up the claims. The Court must determine from the evidence presented that there is no triable issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)

The moving party bears the burden of persuasion that that there is no triable issue of material fact, and that it is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 235 Cal.4th 826, 850.) Consequently, a Defendant moving for summary judgment bears the burden of persuasion that one or more elements of the cause of action in question cannot be established, or that there is a complete defense thereto. (Ibid.) The motion must be supported by evidentiary facts, not merely the ultimate facts. Further, conclusions of fact or law are not sufficient to support a motion for summary judgment. (Snider v. Snider (1962) 200 Cal.App.2d 741, 751.) 

Once a moving Defendant meets its initial burden, the burden shifts to the Plaintiff to produce evidence to prove the existence of a triable issue of fact regarding that element of its cause of action or the defense at issue in the motion, and if Plaintiff is unable to do so, Defendant will be entitled to judgment as a matter of law. (Saelzler v. Advanced Group 400 (2001) 35 Cal.4th 763, 780-781.)

In ruling on a motion for summary judgment, the trial Court must consider all of the evidence and all of the inferences reasonably drawn therefrom (Code Civ. Proc., § 437c, subd. (c)) and must view the evidence and inferences in the light most favorable to the opposing party. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.) In examining the sufficiency of the affidavits filed in connection with a summary judgment motion, those filed by the moving party are strictly construed, and those of the opposing party are liberally construed. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21.)

In resolving the motion, the Court may not weigh the evidence. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) Rather, the role of the trial Court in resolving a summary judgment motion is to determine whether issues of fact exist, not to decide the merits of the issues. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.) A triable issue of material fact exists only if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar v. Atlantic Richfield, supra, 25 Cal.4th at p. 850.)

“We identify the issues framed by the pleadings, determine whether the moving party has negated the opponent’s claims, and determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261.)

            Undisputed Facts for Motion for Summary Judgment

As required by Code of Civil Procedure section 437c subdivision (b)(1) and California Rules of Court, rule 3.1350 subdivision (c)(2), Preferred filed a separate statement of undisputed material facts (UMF) in support of their motion for summary judgment.

“An opposition to the motion shall be served and filed not less than 14 days preceding the noticed or continued date of hearing, unless the Court for good cause orders otherwise. The opposition, where appropriate, shall consist of affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” (Code Civ. Proc., § 437c, subd. (b)(2).)

“The opposition papers shall include a separate statement that responds to each of the material facts contended by the moving party to be undisputed, indicating if the opposing party agrees or disagrees that those facts are undisputed. The statement also shall set forth plainly and concisely any other material facts the opposing party contends are disputed. Each material fact contended by the opposing party to be disputed shall be followed by a reference to the supporting evidence. Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the Court’s discretion, for granting the motion.” (Code Civ. Proc., § 437c, subd. (b)(2).)

“The Separate Statement in Opposition to Motion must be in the two-column format specified in (h).

“(1) Each material fact claimed by the moving party to be undisputed must be set out verbatim on the left side of the page, below which must be set out the evidence said by the moving party to establish that fact, complete with the moving party’s references to exhibits.

“(2) On the right side of the page, directly opposite the recitation of the moving party’s statement of material facts and supporting evidence, the response must unequivocally state whether that fact is ‘disputed’ or ‘undisputed.’ An opposing party who contends that a fact is disputed must state, on the right side of the page directly opposite the fact in dispute, the nature of the dispute and describe the evidence that supports the position that the fact is controverted. Citation to the evidence in support of the position that a fact is controverted must include reference to the exhibit, title, page, and line numbers.

“(3) If the opposing party contends that additional material facts are pertinent to the disposition of the motion, those facts must be set forth in the separate statement. The separate statement should include only material facts and not any facts that are not pertinent to the disposition of the motion. Each fact must be followed by the evidence that establishes the fact. Citation to the evidence in support of each material fact must include reference to the exhibit, title, page, and line numbers.” (Cal. Rules of Court, rule 3.1350(f).)

In opposition to the motion for summary judgment, the Rubins only provided six declarations of various individuals. None of the declarations were of Plaintiffs in this action. Additionally, the Rubins provided no points and authorities, no separate statement, and no admissible evidence refuting Preferred’s undisputed material facts.

Annette Rubin was clearly aware of the requirement that Plaintiffs file a separate statement. On October 5, 2023, she sent an email to Preferred’s counsel stating: “Mr. Bubman, Good morning. I am now acting in pro per. Please provide an electronic version of the Motion for Summary Judgment separate statement in Word format. [CRC 3. 1350(i)]. Thank you, Annette Rubin.” (Bubman Reply Dec., ¶ 6 & Exh. A.) Preferred complied and sent A. Rubin the separate statement in Word format. (Ibid.)

The undisputed material facts are:

“On August 21, 2017, Plaintiff and Cross-Defendant A. Stuart Rubin (“Stuart”) executed and delivered to Defendant Preferred Bank (“Preferred”) a promissory note (“Note”) for $12,750,000.00 in consideration of a loan Preferred made to Stuart in that amount with an original maturity date of August 2018. Preferred and Stuart executed a Business Loan Agreement and related documents in conjunction with the Note.” (UMF 1.) “On August 21, 2017, to secure the indebtedness and obligations under the Note, the Rubins executed (i) a Deed of Trust on real property located at 715 North Alpine Dr., Beverly Hills, CA 90210 (the ‘Alpine Property’) (the ‘Alpine Deed of Trust’); and (ii) a Deed of Trust on real property located at 4347 Marina Dr., Santa Barbara, CA 93110 (the ‘Marina Property’) (the ‘Marina Deed of Trust’).” (UMF 2.) “On August 21, 2017, to secure Stuart’s performance of his obligations under the Note, Sunset Plaza executed a Commercial Guaranty (the ‘Sunset Plaza Guaranty’).” (UMF 3.) “On August 21, 2017, to secure the Sunset Plaza Guarantee, in his capacity as Sunset Plaza’s Manager, Stuart executed a Deed of Trust on real property located at 1604 Sunset Plaza Dr., Los Angeles, CA 90069 (the ‘Sunset Plaza Property’) (the ‘Sunset Plaza Deed of Trust’).” (UMF 4.) “On August 21, 2017, to secure Stuart’s performance of his obligations under the Note, in their capacities as Trustees of the November 4, 2003 Stuart and Annette Rubin Family Trust (‘the Family Trust’), the Rubins executed a Commercial Guaranty (the ‘Family Trust Guaranty’).” (UMF 5.) “On July 21, 2018, and March 18, 2019, the Rubins obtained extensions of the maturity dates of the Loan from what was originally August 21, 2018, to May 5, 2019, with consents given by the guarantors.” (UMF 6.)

“On April 23, 2019, to secure Stuart’s performance of his obligations under the Note, in his capacity as Trustee of the December 21, 2001 Stuart Rubin Children’s Trust (‘the Children’s Trust’), Scott Eisner executed a Commercial Guaranty (the ‘Children’s Trust Guaranty’).” (UMF 7.) “On April 23, 2019, Stuart executed a Change in Terms Agreement which (i) extended the Note’s maturity date to March 5, 2020; (ii) increased the Note’s principal balance to $16,875,868.57; (iii) changed the Note’s interest rate; and (iv) provided that the Note would also be guaranteed by the Children’s Trust.” (UMF 8.) “On April 23, 2019, the Trust Deeds were amended to provide that references to the Note now meant the Note as amended by the Change in Terms Agreement.” (UMF 9.) “The Loan matured on March 5, 2020 but was not repaid.” (UMF 10.)

“On June 3, 2020, as a result of Stuart’s failure to repay the Loan upon maturity of the Note, Preferred caused Notices of Default to be recorded against the Properties.” (UMF 11.) “On September 15 and 16, 2021, as a result of Stuart’s failure to repay the Loan upon maturity of the Note, Preferred caused Notices of Trustee’s Sales to be recorded against the Properties.” (UMF 12.)

“On October 2, 2020, the Rubins filed a lawsuit against Preferred and the foreclosure trustee named in the Trust Deeds in the Superior Court of California for the County of Santa Barbara under case number 20CV03206 (the ‘2020 Lawsuit’). (UMF 13.) “On January 5, 2021, this Court issued a tentative ruling (the ‘January 5 Ruling’) denying the Rubins’ motion for a preliminary injunction based on the following findings: (i) Preferred never executed a forbearance agreement thereby rendering meritless the Rubins’ causes of action for breach of contract, breach of the covenant of good faith and fair dealing and promissory estoppel; (ii) even if Preferred had executed a forbearance agreement, it was dependent upon satisfaction of a condition precedent; namely, an $8 million pay down of the Loan from the sale of the Alpine Property which did not occur; (iii) Stuart was legally prohibited from selling the Alpine Property or the Marina Property because of injunctions entered in other civil actions; and (iv) the Rubins’ allegation that had they known of Preferred’s intention to record notices of default, they could and would have accepted a $14 million offer for the Alpine Property ‘rings hollow’ considering the Rubins were legally prohibited from selling the Alpine Property due to the previously issued injunctions in other civil actions.” (UMF 14.)

“On January 6, 2021, Preferred and Plaintiffs entered into a forbearance agreement (the ‘Forbearance Agreement’) 4 pursuant to which (i) Preferred rescinded its previous Notices of Default and Notices of Sale; (ii) Preferred agreed to refrain from enforcing its rights and remedies under the Loan Documents through June 6, 2021 if the Rubins performed their obligations under the Forbearance Agreement; (iii) the Rubins dismissed the 2020 Lawsuit and provided Preferred with a full and complete release (the ‘Release’) in connection with the Loan and the 2020 Lawsuit; (iv) the Rubins agreed that the January 5 Ruling was binding on them as if it were a final order of the Court; and (v) Stuart confirmed, ratified and restated all of the obligations under the Loan Documents.” (UMF 15.)

“The obligations under the Forbearance Agreement matured in full on June 6, 2021 (the ‘Forbearance Termination Date’) at which time the Rubins were required to (a) pay Preferred the sum of $8,000,000, whether from the sale of any of the Properties, or from any other source; or (b) offer a deed in lieu of foreclosure for the Alpine Property; or (c) pay off the matured Loan in full.” (UMF 16.) “As of the Forbearance Termination Date, the Rubins failed to make any payment to Preferred (either for $8,000,000 or to pay off the Loan in full), and failed to offer Preferred a deed in lieu of foreclosure for the Alpine Property.” (UMF 17.) “The Rubins also failed to meet a variety of other non-monetary obligations pursuant to the Forbearance Agreement including providing Preferred with (i) proof of current payment of property taxes on the Properties; (ii) copies of loan statements for the Properties; (iii) Stuart’s 2019 federal tax return, including all schedules; and (iv) proof of insurance for the Properties.” (UMF 18.)

“On June 7, 2021, the Rubins (as sellers) and Morad Jon Hamilton and Laura Deborah Kallmian (as buyers) jointly executed a document entitled ‘Cancellation of Contract, Release of Deposit and Cancellation of Escrow,’ which cancelled ‘per mutual agreement’ an escrow that had been opened for the Alpine Property on May 25, 2021, as the buyers had failed to pay their deposit into escrow.” (UMF 19.)

“On June 7, 2021, Preferred’s counsel sent the Rubins a letter informing them of the maturity of the obligations under, and their numerous breaches of, the Forbearance Agreement.” (UMF 20.) “On June 15, 2021, Preferred again recorded Notices of Default against each of the Properties.” (UMF 21.) “On September 17, 2021, Preferred again recorded Notices of Trustee’s Sale against each of the Properties.” (UMF 22.) “On September 28, 2021, Preferred submitted a payoff demand to Commerce Escrow Company in connection with an escrow that had been opened for the Alpine Property on July 17, 2021.” (UMF 23.)

“On October 6, 2021, Plaintiffs filed the current lawsuit against Preferred and again sought a preliminary injunction to stop the sale of the Properties.” (UMF 24.) “On February 15, 2022, Preferred demurred to all causes of action in the Complaint. The Court sustained the demurrer as to the third (promissory estoppel), sixth (intentional interference with prospective economic advantage), eighth (unjust enrichment), tenth (breach of fiduciary duty) and eleventh (constructive fraud) causes of action. Plaintiff did not amend the Complaint as to those causes of action.” (UMF 25.) “On December 7, 2021, this Court again denied Plaintiffs’ motion to enjoin Preferred’s sale of the Properties.” (UMF 26.)

“The Riverside injunction that was in place that was one of the primary bases for Judge Anderle’s January 5 Ruling denying the 2020 Motion for Preliminary Injunction was still in place at the time of the December 7, 2021 Preliminary Injunction hearing.” (UMF 27.) “On December 7, 2021, the Riverside Court issued an order in Case No. RIC1905743 denying the Ex Parte Application for Order of Relief from Injunction Enjoining Stuart Rubin From Transferring Ownership in, or Further Encumbering, his Family Residences in Order to Allow him to Sign Documents for the Pending Sale on Modifying Injunction Enjoining Him from Transferring Ownership in, or Further Encumbering, His Family Residences in Order to Allow the Pending Sale.” (UMF 28.)

“On December 24, 2019 in the action entitled U.S. Real Estate Credit Holdings III-A, LP v. Glenroy Coachella, LLC, et al., Riverside Superior Court Case No. RIC1905743 (the ‘Coachella Lawsuit’), Stuart and Plaintiff U.S. Real Estate Credit Holdings III-A, LP stipulated to the issuance of a preliminary injunction (among other relief) (the ‘Coachella Injunction’) as to the sale of the Alpine Property and the Marina Property, which was signed by the Honorable L. Jackson Lucky IV.” (UMF 29.) “On February 3, 3021, Stuart violated the Coachella Injunction by issuing a grant deed transferring an interest in the Marina Property to DLJJ.” (UMF 30.) “On July 28, 2021, Plaintiffs issued a grant deed transferring the fractional interest from DLJJ back to Plaintiffs.” (UMF 31.)

“On August 5, 2021, the Court issued an order holding Stuart in contempt of Court as a result of the transfer of the fractional interest in the property, as he violated the Coachella Injunction.” (UMF 32.) “On December 1, 2021, the Court issued an order denying Stuart’s ex parte application for an order modifying the Coachella Injunction enjoining him from transferring his ownership in or further encumbering his family residences in order to allow the pending sale of the Beverly Hills Property to close and avoid its loss by foreclosure.” (UMF 33.)

“On December 10, 2021, in a petition Annette signed as its manager, Sunset Plaza filed for Chapter 11 bankruptcy (‘the Sunset Plaza Bankruptcy’) staying the foreclosure sale of the Sunset Plaza Property, commenced an adversary proceeding against Preferred and filed an emergency motion (the ‘Emergency Stay Motion’) to stay the foreclosure sale of the Marina Property.” (UMF 34.) “On December 14, 2021, U.S. Bankruptcy Court Judge Ernest Robles denied the Emergency Stay Motion in a hearing that Annette personally attended.” (UMF 35.) “Although offered the opportunity to address the Court during the hearing on the Emergency Stay Motion, Annette instead concealed the fact that the day before, in her capacity as Trustee of the Family Trust, she caused a fractional interest in the Marina Property to be transferred to DLJJ & Associates (‘DLJJ’), a company the Rubins controlled, thereby preventing it from being sold.” (UMF 36.) “On December 14, 2021, only hours after the hearing on the Emergency Stay Motion, in her capacity as DLJJ’s manager, Annette placed DLJJ into Chapter 11 bankruptcy (the ‘DLJJ Bankruptcy’) in a further effort to stop the foreclosure sale of the Marina Property from proceeding as scheduled.” (UMF 37.) “On January 12, 2022, Judge Robles granted Preferred’s motion to dismiss the DLJJ Bankruptcy, concluded it was filed in bad faith and imposed a 180-day bar on DLJJ filing any further bankruptcy petitions.” (UMF 38.) “On February 16, 2022, Judge Robles issued an order which (i) found that the DLJJ Bankruptcy and the transfer of the fractionalized interest in the Marina Property to DLJJ was part of a scheme to hinder, delay, or defraud creditors; (ii) concluded DLJJ was involved in the scheme; and (iii) precluded any other individuals or entities from filing a bankruptcy proceeding as to the Marina Property.” (UMF 39.)

“On July 19, 2021, an escrow was opened for the Alpine Property on behalf of prospective purchaser Shawn Lalezary.” (UMF 40.) “The purchase price ultimately offered by Mr. Lalezary was $15,318,000.” (UMF 41.) “The Rubins were unable to remove the 2019 stipulated injunction that prohibited the Rubins from selling the Alpine Property.” (UMF 42.) “Mr. Lalezary ultimately purchased the Alpine Property at a foreclosure sale conducted on December 10, 2021 for $9,200,000.26, subject to the First Trust Deed in an amount in excess of $5,400,000, held by CitiBank.” (UMF 43.)

            First and Second Causes of Action

Plaintiffs’ first cause of action is for breach of contract. “[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) Plaintiff’s performance or excuse for nonperformance, (3) Defendant’s breach, and (4) the resulting damages to the Plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Plaintiffs’ second cause of action is for breach of the implied covenant of good faith and fair dealing. The Bank argues that this is the same cause of action as for breach of contract and therefore should not give rise to a separate cause of action.

“Breach of the covenant of good faith and fair dealing is nothing more than a cause of action for breach of contract.” (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1344.) “The implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.” (Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094.)

By way of undisputed facts, declarations, and other admissible evidence, Preferred has established that at the end of the forbearance termination date of June 6, 2021, the Rubins were required to pay Preferred $8,000,000.00, offer a deed in lieu of foreclosure for the Alpine property, or pay off the matured loan in full. The evidence shows that they did none of those things.

By way of their complaint, Plaintiffs attempt to excuse their non-performance of the agreement by claiming that Preferred improperly recorded a notice of default (NOD) against the Alpine property while the forbearance agreement was still in force and effect. However, the uncontroverted evidence presented by Preferred is that the forbearance agreement provides for an extension of the June 6, 2021, forbearance termination date for an additional 30 days only if “the Rubin Parties open a bona fide arms-length escrow with a customary deposit and proof of source of funds to close escrow for the sale of [the Alpine Property] or [the Marina Property] before the Forbearance Termination Date [i.e., June 6, 2021] that at closing would result in payment to Bank of not less than $8M.” Plaintiffs did not open escrow for the sale of the Marina property and the only escrow that was opened on the Alpine property was the May 2021 escrow, which was cancelled by the Rubins and the potential buyers on June 7, 2021. The NOD against the Alpine property was not recorded until June 15, 2021. Also, as this Court previously observed, the Rubins could not have sold the Alpine property even if they had wanted to due to the injunction in separate litigation.

Preferred has established that they did not breach the contract. Plaintiffs have failed to produce any evidence to the contrary. As such, Preferred has established that Plaintiff will be unable to prove their first two causes of action.

            Fourth Cause of Action

Plaintiffs’ fourth cause of action is for slander of title. “The elements of a cause of action for slander of title are ‘(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.’ [Citations.]” (Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664, italics omitted.)

Plaintiffs’ fourth cause of action for slander of title is based on the NOD and NOS. As stated above, Plaintiffs failed to comply with the terms of the forbearance agreement. Because the forbearance agreement had matured, the loan was due and payable, and Plaintiffs had failed to perform on the agreement, the NOD and NOS were with justification and were not “false.”

As such, Preferred has established that Plaintiffs’ fourth cause of action has no merit. Plaintiffs provide no evidence to the contrary and do not show any triable issue of material fact.

Fifth Cause of Action

Plaintiffs’ fifth cause of action is for interference with contractual relations. “Tortious interference with contractual relations requires ‘(1) the existence of a valid contract between the Plaintiff and a third party; (2) the Defendant’s knowledge of that contract; (3) the Defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’ [Citations.]” (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1141.)

Plaintiffs’ fifth cause of action is also based upon the filing of the NOD and NOS. Preferred has established that Plaintiffs were not damaged by the filing of the documents because the escrow opened after the recording of the NOD was for a higher price than the escrow that was entered prior to the NOD filing. Further, because of the injunctions mentioned above, Plaintiffs could not have sold the Alpine property while the injunctions were in place. Plaintiffs have failed to refute these facts or to present any evidence of Preferred’s “intentional acts designed to induce a breach or disruption of [any] contractual relationship,” nor have they provided any evidence of damages.

Preferred has established that Plaintiffs’ fifth cause of action has no merit. Plaintiffs provide no evidence to the contrary and do not show any triable issue of material fact.

            Seventh Cause of Action

Plaintiffs’ seventh cause of action is for violation of the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) “Business and Professions Code section 17200 et seq. prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. The UCL covers a wide range of conduct. It embraces ‘ “ ‘ “anything that can properly be called a business practice and that at the same time is forbidden by law.” ’ ” [Citations.]’ [Citation.]” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143, fn. omitted.)

Preferred has presented evidence and established that it complied with all the provisions of the forbearance agreement according to their express terms and that it did not violate any laws in attempting to recover the money owed by Plaintiffs. Plaintiffs have provided no evidence in opposition that indicates that Preferred did anything unlawful, unfair, or fraudulent in attempting to collect the money that it is owed. Plaintiffs have failed to identify any regulation or standard that was violated. As such, there is no triable issue of material fact as to Plaintiffs’ seventh cause of action.

            Ninth Cause of Action

Plaintiffs’ ninth cause of action is for declaratory relief relating to the parties’ obligations under the Forbearance Agreement. (Complaint, ¶ 122.)

“Any person interested under a written instrument …, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, … may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior Court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” (Code Civ. Proc., § 1060.)

As the motion for summary judgment is being granted with respect to all Plaintiffs’ remaining causes of action, there is nothing for the Court to declare with respect to the obligations under the forbearance agreement.

The motion for summary judgement, as to Plaintiffs’ complaint against Preferred, will be granted.

2. Terminating Sanctions

There have been numerous discovery disputes related to Plaintiffs’ failure to properly respond to discovery. The timeline of the discovery disputes, and related matters, is:

On October 3, 2022, Preferred propounded form interrogatories, special interrogatories, requests for admissions, and requests for production of documents on all Plaintiffs. (Bubman, Dec., ¶ 3.) On October 25, 2022, Plaintiffs’ first attorney in this matter, Jared Katz, requested an extension of them to respond to the discovery requests to give him time to withdraw as counsel. (Bubman, Dec., ¶ 4.) Plaintiffs were given an extension to respond to November 19, 2022. (Ibid.) On November 16, 2022, Katz filed a motion to be relieved as counsel for Plaintiffs and requested an additional extension to respond with the new date of December 5, 2022. (Bubman, Dec., ¶ 5.) The request was granted. (Ibid.) On November 29, 2022, Katz requested a third extension to respond to a date after the date for hearing on his motion to withdraw. (Bubman, Dec., ¶ 6.) The request was denied. (Ibid.) On December 2, 2022, Plaintiffs served unverified objection only responses. (Bubman, Dec., ¶ 7.)

On December 22, 2022, Preferred filed 16 motions to compel responses to the discovery and a hearing was scheduled for February 15, 2023. (Bubman, Dec., ¶ 9.)

On January 18, 2023, Katz was relieved as counsel for all Plaintiffs.

Plaintiffs filed a motion for protective order to extend their time in which to respond to the discovery with a hearing date of February 1, 2023. (Bubman, Dec., ¶ 8.) The motion was granted, and Plaintiffs were ordered to respond to the discovery by April 15, 2023, and Preferred’s motions to compel were continued to May 3, 2023. (Bubman, Dec., ¶ 11.)

On April 12, 2023, John Thyne, III substituted into the action on behalf of the Rubins and substituted into the action on behalf of the Rubin Family Trust on April 20, 2023. (Bubman, Dec., ¶ 14.) Thyne did not substitute in as counsel for Sunset Plaza or the Children’s Trust, both of which have been unrepresented in this action since January 18, 2023. (Ibid.)

On May 3, 2023, at a status conference, the Court continued the16 motions to compel discovery to June 7, 2023, in order to give Plaintiffs additional time to provide proper discovery responses, and again ordered A. Rubin to provide defense counsel with the address of Dusty Berke, who is apparently the current trustee of the Children’s Trust. (Bubman, Dec., ¶ 16.)

On June 7, 2023, the Court granted the 16 pending motions to compel responses to discovery, filed by PB, against Plaintiffs and ordered sanctions against each of the Plaintiffs in the amount of $500.00, for a total of $8,000.00, payable by June 21, 2023. (Bubman, Dec., ¶ 17.)

As of October 2, 2023 (the date of Bubman’s declaration), Plaintiffs have provided no substantive responses to the discovery, nor have they paid the full amount of the monetary sanctions. (Bubman, Dec., ¶¶ 18, 19.)

The address provided by A. Rubin to defense counsel, for the Children’s Trust is incorrect. (Bubman, Dec., ¶ 20.)

In addition to “violations of both the February 1 Order and the June 7 Order, Plaintiffs also failed to appear with new counsel at the hearing on the Protective Order Motion as ordered, failed to appear at the continued March 1, 2023 Case Management Conference as ordered, violated this Court’s order on March 1, 2023 to provide [defense counsel] with Ms. Berke’s correct address, violated this Court’s repeated order on May 3, 2023 to provide [defense counsel] Ms. Berke’s correct address no later than May 13, 2023 and failed to file a status report by May 26, 2023 as directed regarding Preferred’s motions to compel.” (Bubman, Dec., ¶ 22.)

On October 4, 2023, Thyne’s motion to be relieved as counsel was denied. The Court concluded: “The Motion must be denied. We have done this once before. Rubin’s previous counsel, Jared Katz, was relieved in 1/2023; Mr. Thyne substituted in this case on 4/12/23; the trial date and MSC dates were long before set and confirmed at the CMC on 6/23/23; at that CMC Mr. Thyne acknowledged the previously set trial date; the SJ Motion was filed by the Bank on 8/14/23; it is vastly too late in this case to relieve counsel [again]; Mr. Thyne is an experienced and competent lawyer; has been told numerous times that the Court intended this case to go on schedule; to seek to be relieved on the very eve of trial and just before significant motions are to be decided would be extraordinarily unfair to the Bank and the Court. The Bank’s Opposition to the Motion is very persuasive.”

However, the following day, on October 5, 2023, both Rubin and A. Rubin filed substitutions of attorney relieving Thyne of his representation of them and becoming self-represented. The decision to ignore this Court’s Order when given an opportunity to be represented at this time in this case counts heavily against Plaintiffs.

Preferred seeks terminating sanctions for Plaintiffs’ failure to provide substantive discovery responses.

Sanctions available for disobeying a Court order to provide discovery responses include: (1) Monetary sanctions; (2) Issue sanctions; (3) Evidence sanctions; (4) Terminating sanctions; and (5) Contempt. (Code Civ. Proc., 2023.030.)

“If a lesser sanction fails to curb misuse, a greater sanction is warranted: continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse.” (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.)

“A Court has broad discretion in selecting the appropriate penalty” for a party’s refusal to obey a discovery order. (Lopez v. Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604.) Despite this broad discretion, the Courts have long recognized that the terminating sanction is a drastic penalty and should be used sparingly. A trial Court must be cautious when imposing a terminating sanction because the sanction eliminates a party’s fundamental right to a trial, thus implicating due process rights.

“While sanctions are discretionary, the term judicial discretion implies absence of arbitrary determination, capricious disposition, or whimsical thinking. It imports the exercise of discriminating judgment within the bounds of reason. To exercise the power of judicial discretion, all the material facts must be known and considered, together also with the legal principles essential to an informed, intelligent and just decision. [Citation.] Therefore, the Court must examine the entire record in determining whether the ultimate sanction should be imposed. [Citations.]” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 796.)

The Court has done all those things. The Court agrees with Preferred’s position on the issue. It did take an unreasonably long time for Plaintiffs to comply; Plaintiffs were given ample opportunity to provide proper code-compliant responses to discovery and did not do so; deliberately and intentionally.

Preferred claims not to have been served with any “substantive responses.” (Bubman Dec., ¶ 18.) A. Rubin claims to have provided responses on April 24, 2023, and was in the process of resending them on November 1, 2023. (Rubin Dec., ¶ 20.) But Preferred’s counsel reports it has received no substantive responses. In reply to Rubins’ opposition, Preferred’s counsel states that he has not received any discovery responses from anyone in this matter between November 1, 2023, and November 7, 2023.

The Court believes that Preferred is making an accurate statement regarding Plaintiffs’ failure to provide substantive responses and finds Plaintiffs have routinely, with rhythmic regularity, consistently failed to do what the Court ruled has ruled, long ago. The decision not to comply has been deliberate. The Court has examined the entire record including the ex parte motion of Plaintiffs to continue the matter that was heard on 11/14/23 at 8:15am. The Court pointed out at that hearing [emphasis added]: “This case was filed two years ago in 10/2021. It has been very heavily litigated. Their first lawyer made a Motion to Withdraw in 11/2022; the Court finally granted that motion over the objection of the defense. We were in the midst of very heavy discovery motions made by the defense. In 7/2023 Defendant’s Motions to Compel and for Sanctions was granted, albeit the discovery was never forthcoming. Subsequently Plaintiffs second lawyer made a motion to withdraw. Plaintiffs had an opportunity to be represented by that lawyer in this matter when the Court denied his untimely request to withdraw only to have Plaintiffs subsequently substitute their lawyer out anyway on the 10/5/23, virtually on the eve of trial and ignoring the Court’s analysis and Order, electing instead to represent themselves. That was done deliberately, not through mistake or ignorance. At the same time, they have continued to fail to respond to discovery requests. Plaintiffs have been given every opportunity to do what was required in a timely fashion. But they have consistently and routinely ignored all the timelines. They have made their elections deliberately. This is not a situation where there are Plaintiffs who are handicapped by being self-represented. They know exactly what they are doing or not doing. They are clearly able to understand what must be done and what they must do to participate. Plaintiffs must live with the decisions they have knowing and routinely made. Defendant has rights here, too.”

The motion for terminating sanctions will be granted.